House prices now 7.6 times annual earnings in England and Wales up from 3.6 times in 1997

17th March 2017

On average, working people could have expected to pay around 7.6 times their annual earnings on purchasing a home in England and Wales in 2016 rising from 3.6 times earnings in 1997 according to a report by the Office for National Statistics.

This means the median price paid for residential property in England and Wales increased by 259% between 1997 and 2016 while median individual annual earnings increased by 68% in the same time period.

In 2016, Kensington and Chelsea was the least affordable area to buy a property in England and Wales. It had the highest ratio of house prices to annual earnings, with house prices being 38.5 times the median gross annual earnings. This has increased since 1997 when house prices were 11.8 times earnings.

Copeland in Cumbria was the most affordable local authority district in England and Wales to buy a property in 2016, with house prices being on average 2.8 times the median gross annual earnings. This has increased since 1997 when house prices were on average 1.96 times earnings. Although Copeland is the most affordable local authority in England and Wales, it does not mean that this local authority has the lowest house prices or the highest earnings; rather it has the highest earnings in relation to the house prices. All 338 local authorities in England and Wales for which data are available have had an increase in the affordability ratio between 1997 and 2016, and so housing affordability has worsened over time.

Housing affordability has not worsened at the same rate across all local authorities. In 1997, Merthyr Tydfil was the most affordable local authority in England and Wales, with an affordability ratio of 1.9. However, Merthyr Tydfil was no longer the most affordable local authority in 2016, with an affordability ratio of 3.8. There were 3 local authorities more affordable in 2016: Copeland, Neath Port Talbot and Blaenau Gwent. Kensington and Chelsea did remain the least affordable local authority every year between 1997 and 2016, when excluding the Isles of Scilly.

In 2016, of the 10 least affordable local authorities 7 were in London. This is an increase from 5 out of the 10 least affordable local authorities in 1999. Figure 4 shows that 9 out of the 10 local authorities with the largest increase in affordability ratio between 1999 and 2016 are in London. For example, in 1999 an employee in Camden could expect to pay 7.7 times their annual earnings on purchasing a property, whereas in 2016, they could expect to spend on average 19.6 times their annual earnings.

Out of the 10 local authorities that had the smallest increase in affordability ratio between 1999 and 2016, there were 5 in the North West, 3 were in Wales and 2 were in the North East. In Hyndburn, in the North West of England, an employee could expect to spend 2.6 times their annual earnings on purchasing a property in 1999, but this increased to 4.1 times their annual earnings in 2016.